The Covid pandemic’s devastation resulted in businesses shutting down, initially reducing demand for goods and disrupting the supply chain with factories and warehouses significantly reducing output or closing.
The trucking industry faced layoffs in 2020 with 88,000 trucking jobs lost and over 3,000 trucking companies closing, according to Commercial Carrier Journal. Many truckers sought other occupations and didn’t return behind the wheel.
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When the pandemic subsided, the trucking industry faced a record driver shortage of over 81,000 drivers in 2021, according to truckinfo.net.
The driver shortage had a major impact on trucking companies with increased costs, supply chain problems and shipping delays. Companies needed to pay higher wages to attract drivers, and they were seeing increased costs from driver turnover, recruitment and training. In 2021, thousands of new drivers started entering the trucking industry as freight rates began to rise, and by July 2023, the industry saw a 96% increase in registered for-hire drivers to over 475,000, Time reported.
Unfortunately, rates began to fall in 2022 and diesel fuel more than doubled in price. Trucking companies also began dealing with several other challenges, including inflation, high interest rates, and rising insurance and wage costs.
Leading national trucking companies like J.B. Hunt Transport Services (JBHT) , Knight-Swift Transport Services (KNX) and XPO (XPO) put pressure on smaller companies that struggle to generate adequate revenue to stay afloat.
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Financial distress in the logistics industry has led several trucking companies to file Chapter 11 to reorganize or, in some cases, file Chapter 7 to liquidate their assets.
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Freight forwarder company Boateng Logistics shuttered its business as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate, and 92-year-old trucking company Arnold Transportation Services laid off all of its employees and shut down operations five days before filing for Chapter 7 liquidation on April 30.
U.S. Logistics Solutions, a shipping company owned by private equity firm Ten Oaks Group, on June 21 filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas in Houston as it has shut down operations, laid off its employees and planned to liquidate its assets.
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Three Florida trucking companies file Chapter 11
And in July, three more trucking companies have filed for Chapter 11 protection to reorganize their businesses.
Miami, Fla.-based trucking company AB Brothers USA and its affiliate A1 Transport Network on July 20 filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Florida to reorganize their debts.
AB Brothers listed over $593,000 in assets and $1.05 million in liabilities in its petition. The debtor’s largest creditor is Crossroads Equipment Lease & Finance, owed over $233,600.
McAlpin, Fla.-based AOG Trucking on July 17 filed for Chapter 11 bankruptcy, listing $1 million to $10 million in assets and liabilities in its petition. The debtor’s largest creditor is BMO Harris Bank, which it owes over $713,500 in debts.
The debtors did not indicate reasons for filing bankruptcy in their petitions.
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